The ruling allows for one house per 40 hectares over a 4000 hectare block of forestry land.

Most of the island's 250 residents, who are predominantly Māori, have fought the plan for years.

They do not want any development, and say it would intrude on their way of life, push up property rates, put pressure on existing infrastructure and cause ecological damage.

Jason Murray, who has lived all of his life on the island in Tauranga Harbour said residents will stop any development, by any means it takes.

"That's what we have been talking about on the island and everyone said it, that you know, if you guys build it, then we are going to burn it down because of the passion we hold for this island and protecting all the values that make us who we are, the hapu over here, so yeah, we will defend that and if they are going to build it we are going to burn it."

Western Bay of Plenty mayor Ross Paterson said this was in line with the district plan rules on the mainland.

The democratic and legal process had been followed, Mr Paterson said, adding he hoped those opposed to development would not take the law into their own hands.

"That has happened in other parts of the country and I would be disappointed if it was to happen there. I think through this process we have developed a very good understanding with the five sub-hapu out there and I don't really think that would happen in the long term."

For Mr Murray the need to stop any housing development is more than just not wanting to share the island with others.

"The land up there was stolen land, it was confiscated right back in the days [of the land wars] and the people have been fighting to get it back ever since then. That whole place has huge cultural significance and spiritual values out there and there's bones and burial sites that are all scattered through the bush. We are kaitiaki (guardians) of that area to protect it and leave it as it is."

Howard Palmer said 102 extra homes would change the makeup of the community forever.

"I'm against putting a whole new community besides ours where their cultural values and their practices are different from ours and that is what will happen."

Just about all legal avenues of opposition have been exhausted, so direct action might need to be considered, Mr Palmer said.

"And I suppose that could take a whole lot of different forms, but it will not be any action against people, but it certainly may be action against property."

Residents did not want it to come to that but the entire process had been a one-sided affair, he said.

Nessie Kuka, who has lived on Matakana all her life, said they would not just sit by and let the development happen.

"(We're) letting all the real estate agents know and everybody else that we are not happy with anybody building up in that bush, otherwise we would have been there a long-time ago," she said.

Mr Paterson said while the project had been approved, the next step was up to the developers.

"[The project] can now happen, just waiting to see if the two large landowners are ready to go in that direction or whether they wish to keep using it as a commercial forest at this stage."

There is talk of mediation between the two sides, but locals opposed to the development are not holding out much hope because they are in no mood to compromise.

RNZ News was unable to make contact with the two companies, TKC Holdings and Carrus Corporation that own the land.